Genting betting on Rank Group
By KATHY FONG

PETALING JAYA: The Genting group seems to have taken a bigger bet on the good prospects of the British gaming industry.

Genting Bhd subsidiary Genting International Plc has bought a 9.38% stake in Rank Group plc, the second biggest casino operator in Britain.

This is the third acquisition that Genting has made in Britain after Stanley Leisure, which is now called Genting Stanley (the biggest casino owner in Britain), and London Club International, which it has already divested to Harrah's Entertainment Plc.

Genting International is in the midst of building its S$5.75bil Sentosa integrated resort in Singapore.

Analysts said the acquisition showed Genting was banking on the liberalisation in the British gaming industry that would permit Las Vegas-style casino to be built to attract visitors from the euro land.

In an announcement to the Singapore Stock Exchange, Genting International said the acquisition, which was conducted through its wholly-owned unit, Palomino Ltd, was financed by internal funds and S$71.2mil from the net proceed of the rights issue that was completed in September.

However, it did not disclose the value of the purchase.

Rank Group has a paid-up capital of 390.53 million shares. An equity interest of 9.38% represents 36.63 million shares. At the price of 111 pence at press time, the stake would cost about £40.66mil (RM282mil).

Analysts estimated the cost could be lower because Rank Group, which is listed on the London Stock Exchange, actually tanked to a historic low of 77 pence last month as investors dumped the shares amid concerns over its profitability.

The counter only regained some lost ground recently when speculation on it being the takeover target was rife.

Several names were said to be keen on acquiring the group, which also operates bingo clubs plus on-line gaming and bookmaking services.

According to Bloomberg, Rank Group, indeed, had given warning that it would miss its forecast after the government's smoking ban drove away its gamblers and new laws forced the removal of some electronic gaming terminals that offered higher jackpots.

Genting International said the share purchase was not expected to have any material impact on the company's earnings and net tangible asset.

Holding a 9.38% stake in the Rank Group appears to be passive investment that may not generate much contribution.

However, some analysts did not rule out the possibility that Genting would raise its stake further in the future like what it did in Genting Stanley.

Analysts noted it was a natural move for Genting to buy more gaming assets.

But such acquisition might not bear fruit in the short term because the picture on the liberalisation in the British gaming sector seems rather patchy for the time being.